Natural Gas Pipelines

[ GWh of Electricity Equivalent Added: ]

1.4K

[ Jobs Impact: ]

Low

Medium

High

[ Budget Impact:]

Low

Medium

High

[ Conventional Pollutants Reduced: ]

N/A

[ Megatons of GHG Reduced: ]

1.9

Overview

Natural gas production is booming across the U.S., providing a low-cost, cleaner fuel for electricity, manufacturing, and vehicles. One key to ensuring that natural gas is as clean as possible is preventing leaks along the natural gas supply chain. Methane, the primary component of natural gas, mostly breaks down into CO2 when combusted as fuel. But when it escapes into the atmosphere before it can be captured and burned, it is 21 times more potent as a greenhouse gas than CO2.1 A number of cost-effective technologies have already been developed to address the problem of fugitive methane emissions, including those from the transmission and distribution processes. These technologies could be put to work more quickly and effectively with additional federal resources, as well as increased cooperation between EPA and industry.

Analysis

The shale gas revolution has handed the United States a new tool to dramatically curb its greenhouse gas emissions. While burning natural gas does produce carbon dioxide, its emission levels are half those of coal.2 Unfortunately, some natural gas escapes during the production, processing, transmission, and distribution processes. These fugitive emissions amount to 32 megatons of CO2 equivalent annually3 —roughly the same amount of GHG’s emitted by 6.3 million cars.4 At a certain level, fugitive emissions could actually negate the climate benefits of natural gas combustion over that of “dirtier” fuels like coal for power generation; and they may already be making natural gas more carbon-intensive than petroleum as a vehicle fuel.5 While new EPA regulations could reduce fugitive emissions from natural gas production,6 they do not address the emissions from natural gas pipelines.7

Much of the natural gas industry is implementing new best practices and technological advances that significantly reduce fugitive emissions from pipelines. Replacing cast iron pipelines with plastic, for instance, can reduce methane emissions by about 96%.8 While cast iron and unprotected steel pipelines are only about 8% of distribution pipeline mileage, they were responsible for 67% of the methane emissions of this particular set of infrastructure.9 Much of the reductions in emissions from the industry as a whole since 1990 have come from improvements to these particular pipelines.10 The challenge now is addressing the remaining inefficient pipelines, which tend to be located in dense urban areas or other locations that make replacement extremely difficult.11

EPA is attempting to reduce fugitive emissions through its Natural Gas STAR Program, a voluntary initiative that works with the natural gas industry.12 Thanks to voluntary improvements made by producers, many of whom have participated in Natural Gas STAR, overall emissions from natural gas systems are down 13% from 1990 levels.13 But industry has concerns with the methodology used by EPA when analyzing the data that producers have submitted through Natural Gas STAR,14 causing at least one major producer to leave the program entirely.15 Failure of the Natural Gas STAR program would deprive the federal government of an effective tool that has encouraged producers to outperform federal environmental regulations.

Implementation

Carefully crafted policies could generate environmental benefits by reducing fugitive emissions while allowing industry to capture more product and more profit.

Create a Program to Finance Pipeline Liner Installation

The federal government should provide short-term loans with three-year paybacks to fund the installation of plastic pipeline liners when leaky steel or cast iron pipelines cannot be cost-effectively replaced. Although these liners generally pay for themselves quickly,16 the up-front costs of liner installation can be a deterrent. Lining the remaining cast iron and unprotected steel pipelines in America’s distribution infrastructure alone would reduce methane emissions by 5.9 megatons CO2 equivalent per year.17 EPA estimates that the installed cost of a pipeline liner is about $10,000 per mile,18 meaning that it would take $1 billion to line the remaining 100,000 miles of cast iron and unprotected steel distribution pipelines. Congress should offer low-interest financing for a period of no longer than 10 years, at which point the loan program should be retired and all funds returned to the Treasury.

Focus the Natural Gas STAR Program on its Primary Mission

EPA should update its memorandum of understanding with all Natural Gas STAR participants to include a self-imposed restriction on use of data submitted through Natural Gas STAR for any purpose outside of the program. Congress has given multiple federal agencies specific authority to acquire emissions data to help them develop regulations. In contrast, the purpose of Natural Gas STAR is to encourage voluntary action from industry—a mission that could be jeopardized by EPA’s use of program data for unrelated reporting and regulatory activities. Natural Gas STAR should also shift its focus toward best practices that will allow participants to meet and eventually exceed the new EPA standards scheduled to take effect in 2015. Focus should also be directed at improvements in activities not covered by these new standards, such as pipeline integrity.

Encourage Greater Participation in Natural Gas STAR

Congress should provide Natural Gas STAR with funding that can be issued as grants to smaller producers considering participation in the program. These grants would offset some of the monitoring and reporting costs of Natural Gas STAR,19 which can be a deterrent to many in the industry.20

EPA’s New Source Performance Standards do include a portion of transmission activities, focusing mainly on compressors used in this process. This Component addresses pipeline issues that would not necessarily be addressed by EPA’s new regulations.

Implementation

How to Use the PowerBook

The PowerBook is a menu of á la carte options, not a blueprint that requires every element to hold it together. It is designed to provide federal policymakers and regulators with a selection of policy ideas to help solve specific challenges in how our nation produces, transports, and consumes energy.

SECTORS

The PowerBook is divided into five economic sectors: power, transmission, buildings and efficiency, industry, and transportation. Each sector includes multiple components, which are specific elements of that sector that require some policy change. Components that impact multiple sectors, such as clean energy finance or regulatory reform, are included in a sixth cross-sector section.

COMPONENTS

Each component has three parts: a short overview, an analysis of the challenges and opportunities for energy, employment, and the environment, and an implementation section that outlines specific actions that Congress, the administration, or the independent regulatory agencies can take. The policy recommendations in the implementation section are intended to serve as frameworks for more detailed legislation or regulatory reform proposals.

The components in the PowerBook reflect the input from a broad group of business leaders, policymakers, analysts, and academics. We will update them regularly to add new policy ideas, revise existing proposals, and reflect progress made in Congress or through the regulatory process. We invite readers to provide us suggestions to build upon the proposals in our components or new policies we should consider adding. Please send us your comments via the contact page.

OUR ANALYSIS

The PowerBook provides both pragmatic ideas to move America toward cleaner energy and data showing the potential impacts that these policies could have on our energy systems and economy. By combining several datasets, from economy-wide to industry-specific, we have developed a basic methodology for each component to estimate the effects these policies would have on CO2, conventional pollutants, and domestic energy needs. While future, independent modeling will provide higher accuracy, the current metrics offer a general barometer of impact and a way to compare the effects of various components.